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U.S. Officials Urge for Policies to Grow Puerto Rico’s Economy

By on August 26, 2016

Gov. Alejandro García Padilla and U.S. Health & Human Services Secretary Sylvia Mathews Burwell met in La Fortaleza in late April.

Gov. Alejandro García Padilla and U.S. Health & Human Services Secretary Sylvia Mathews Burwell met in La Fortaleza in late April.

SAN JUAN — In a letter dated Friday, Aug. 26, U.S. Secretary of Treasury Jacob Lew and Health Secretary Sylvia Burwell urge Sen. Orrin Hatch (R-Utah) and the Congressional Task Force on Economic Growth in Puerto Rico to move swiftly on the implementation of policies that can spur economic development on the island.

Once again, the Barack Obama administration officials believe it is imperative for Congress to tackle two critical issues: inadequate federal healthcare funding in Puerto Rico, particularly over Medicaid; and incentives that foster growth in the labor market, according to the letter.

Achieving Medicaid Parity

On the healthcare front, they stress that “Puerto Rico’s Medicaid program must be reformed to raise the standard of care, strengthen program integrity, prevent unstable Medicaid financing from exacerbating Puerto Rico’s economic crisis, and avoid a drop in coverage when one-time funds from the [Affordable Care Act] expire,” the letter reads.

For instance, the Obama administration is calling for removing the cap on Puerto Rico’s Medicaid program and gradually increasing the federal Medicaid match on the island. Also, they recommend strengthening long-term care services and supports will support address needs of Medicaid enrollees in Puerto Rico while creating jobs.

“Any serious proposal for Puerto Rico’s future [economic] growth starts with addressing the inadequacies of Puerto Rico’s treatment in the Medicaid program,” reads the letter, which also warns about the possibility of losing one-time funds provided by the Affordable Care Act as early as December 2017. As a result, up to 900,000 Puerto Rico residents could lose their healthcare coverage, the officials state.

Losing these funds will “create a disruption in cash flow and affect the operations of providers that participate in the Commonwealth’s health insurance program, impairing access to care for all age groups,” the letter further reads. Moreover, the deterioration in health services is “especially concerning given the public health threat of Zika.”

Pushing for Economic Growth

In the letter, the officials call for granting Puerto Rico with access to the earned income tax credit (EITC), “one of the most powerful policy tools” to spur economic growth and incentivize work, particularly on an island with one of the lowest labor participation rates anywhere, at roughly 40%.

“A federally-financed, locally-administered EITC would create incentives for work and increase participation in the formal economy. Adopting a locally-administered EITC consistent with the President’s budget proposal would pull 54,000 Puerto Ricans out of poverty and increase Puerto Rico’s Gross National Product by $1.05 billion, or 1.5 percent,” reads the document, adding that an expanded child tax credit could also complement these efforts.

Moreover, it is vital for the commonwealth to improve the way it benchmarks, measures and tracks economic growth. Thus, the officials are recommending that the U.S. Census Bureau explores the possibility of including Puerto Rico in its Current Population Survey and Census of Governments — both of which are primary sources of labor and government information in the U.S. — as well as for the National Agricultural Statistics Service to include the island in its surveys.

“However, this is only a first step: updating Puerto Rico’s statistical methodologies and including Puerto Rico in other data sets is essential,” the letter reads.

Lastly, the Obama administration is urging to accelerate and build on federal initiatives already underway in such areas as aerospace, export services, information, biotechnology, pharmaceuticals, medical devices, agriculture, infrastructure and manufacturing.

Late last month, Sen. Hatch was appointed chairman of the Congressional Task Force on Economic Growth in Puerto Rico—an eight-member bipartisan committee comprising lawmakers from both chambers. The group will brief Congress within the first 15 days of September, and present a report by Dec. 31 with its findings, according to the Puerto Rico Oversight, Management & Economic Stability Act (Promesa).

“We expect that the Task Force will examine and consider a range of additional proposals as it works to recommend changes to federal law and programs that would spur sustainable long-term economic growth, encourage job creation, reduce child poverty, and attract investment in Puerto Rico,” the letter concludes.

 

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